Exhibit 10.7
ALSIUS CORPORATION
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (this "Agreement"), effective as of this
1st day of July, 2003 by and between _________________ ("Employee") and ALSIUS
CORPORATION, a California corporation (the "Company").
RECITALS
The Board of Directors of the Company believes it is in the best interests
of the Company to provide Employee with compensation arrangements and equity
benefits upon a Change of Control (as hereinafter defined), that are intended to
provide Employee with enhanced financial security, are competitive with those of
other companies, and provide sufficient incentive to Employee to remain at the
Company as an employee through and after a Change of Control.
In consideration of the mutual promises and covenants herein contained, and
in consideration of the continuing employment of Employee by the Company, the
adequacy and sufficiency of which are hereby acknowledged, the parties agree as
follows:
AGREEMENT
1. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) "Base Compensation" means the base salary the Company pays Employee for
his or her services immediately prior to Employee's termination.
(b) "Cause" means (i) gross negligence or willful misconduct in the
performance of Employee's duties to the Company, including Employee's refusal to
comply in any material respect with the legal directives of the Board of
Directors, or any member of the Company's management, if any, that is higher in
rank than Employee after Employee has been notified in writing; (ii) material
and willful violation of any federal or state law by Employee that has resulted
or is likely to result in material damage to the Company; (iii) commission of
any act of fraud by Employee with respect to the Company; or (iv) Employee's
conviction of a felony or a crime causing material harm to the standing and
reputation of the Company.
(c) "Change of Control" means the occurrence of any of the following
whether they occur in a single transaction or series of related transactions:
(i) A merger or consolidation of the Company with or into another
entity, or any other corporate reorganization, if more than fifty percent (50%)
of the combined voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by parties who were not shareholders of the Company immediately prior
to such merger, consolidation or other reorganization;
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(ii) A stock purchase or similar transaction in which one or more
parties acquire, in the aggregate, more than fifty percent (50%) of the combined
voting power of Company's outstanding equity securities; or
(iii) The sale, transfer or other disposition of more than fifty
percent (50%) of the assets of the Company
(d) "Involuntary Termination" shall be deemed to occur if Employee resigns
from the Company due to (i) a greater than fifteen percent (15%) salary
reduction, (ii) the relocation of Employee's office or work location more than
forty (40) miles from the Company's current location, or (iii) a substantial
change in title or duties such that Employee is (a) one or more rungs lower in
title and rank (not taking into account reductions in title and rank due
naturally to becoming an employee of an acquirer that is larger than the
Company), and/or (b) required to switch departments (such as being required to
switch from manufacturing to sales, sales to accounting, etc.) or to otherwise
perform a job that requires markedly different skills from the one previously
performed.
2. Change of Control Severance Benefits. If Employee's employment with the
Company terminates at any time within twelve (12) months after a Change of
Control, then the following shall apply:
(a) Voluntary Resignation; Termination For Cause. If Employee voluntarily
resigns from the Company or is terminated for Cause, Employee shall not be
entitled to receive severance or other benefits hereunder except for those, if
any, as may be available under the Company's severance and benefits plans and
policies then existing at the time of such termination.
(b) Involuntary Termination; Termination Without Cause. If an Involuntary
Termination occurs or Employee is terminated without Cause, Employee shall be
entitled to receive for __________ (___) months following Employee's
termination, Employee's Base Compensation, which shall not be less than the Base
Compensation to which Employee was entitled on the date that is sixty (60) days
prior to Employee's termination, payable in regular payroll increments.
(c) Reduction of Benefits. The severance payment to Employee set forth in
Section 2(b) hereof shall be reduced by fifty percent (50%) of the compensation
earned at a subsequent job by Employee during his or her severance payment
period.
3. Option and Stock Acceleration.
(a) Acceleration of Stock Options. If Employee's employment with the
Company is terminated without Cause or as the result of an Involuntary
Termination within the twelve (12)-month period following a Change of Control,
then the remaining portion of Employee's unvested stock options shall fully
vest, such that all outstanding stock options granted to Employee shall be
vested one hundred percent (100%).
(b) Voluntary Resignation; Termination for Cause. Employee shall not be
entitled to receive any accelerated vesting for any then unvested portion of his
or her stock options if
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Employee voluntarily resigns from the Company or if Employee is terminated for
Cause prior to or following a Change of Control.
4. Non-Compete.
(a) Employee acknowledges that his or her agreement not to compete with the
Company is an essential part of the Company's willingness to provide severance
payments and other benefits hereunder. Employee and the Company agree that, due
to the nature of Employee's employment with the Company, Employee has
confidential and proprietary information relating to the business and operations
of the Company. Employee acknowledges that such information is of utmost
importance to the business of the Company and will continue to be so after
Employee's relationship with the Company is terminated. Employee further
acknowledges that, based on Employee's unique skills, position and exposure to
confidential and proprietary information of the Company, the breach or
threatened breach by Employee of the provisions of this Agreement would cause
irreparable harm to the Company, which harm will not be adequately and fully
redressed by the payment of damages to the Company. Employee further
acknowledges that in the event Employee's employment with the Company
terminates, Employee will be able to earn a livelihood without violating the
restrictions set forth in this Agreement.
(b) Employee agrees that the limitations of time, geography and scope of
activity agreed to in the foregoing covenants are reasonable because, among
other things, (i) the Company is engaged in a highly competitive industry, (ii)
Employee has unique access to, and will continue to have access to, the trade
secrets and know-how of the Company, including, without limitation, the plans
and strategy (and, in particular, the competitive strategy) of the Company,
(iii) Employee is receiving significant consideration in connection with this
Agreement, and (iv) if Employee's employment with the Company ended, Employee
would be able to obtain suitable and satisfactory employment without violation
of this Agreement.
(c) During the period Employee is receiving payments and/or other benefits
pursuant to the terms of this Agreement, Employee agrees not to perform any
services for any company or entity in California that directly or indirectly
competes with the Company. During the period Employee is receiving payments
and/or other benefits pursuant to the terms of this Agreement and for a period
of six (6) months thereafter, Employee agrees not to perform any services for
any company or entity in any state outside of California that directly or
indirectly competes with the Company.
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5. At-Will Employment. The Company and Employee acknowledge that Employee's
employment is at-will and may be terminated at any time and for any reason, with
or without notice. On termination of Employee's employment with the Company,
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination.
6. Term, Amendment and Termination.
(a) Term. Subject to Section 6(b) hereof, this Agreement shall terminate
upon the earlier of (i) the date that all obligations of the parties hereunder
have been satisfied, or (ii) twelve (12) months after a Change of Control. A
termination of this Agreement pursuant to the preceding sentence shall be
effective for all purposes, except that such termination shall not affect the
payment or provision of compensation or benefits on account of a termination of
employment occurring prior to the termination of the terms of this Agreement.
(b) Amendment and Termination. This Agreement may be amended or terminated
only by written agreement of Employee and the Chief Executive Officer or, if
Employee is the Chief Executive Officer, an authorized officer or board member
of the Company.
7. Notice.
(a) General. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid or when mailed overnight delivery via a
courier company. In the case of Employee, mailed notices shall be addressed to
Employee at the home address which Employee most recently communicated to the
Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its President or the Chairman of the Board of Directors.
(b) Notice of Termination. Any termination by the Company for Cause or by
Employee as a result of an Involuntary Termination shall be communicated by a
notice of termination of the other party hereto given in accordance with Section
7(a) hereof. Such notice shall indicate the specific termination provision in
this Agreement relied upon, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision so
indicated, and specify the termination date (which shall be not more than
fifteen (15) days after the giving of such notice). The failure by Employee to
include in the notice any fact or circumstance that contributes to a showing of
Involuntary Termination shall not waive any right of Employee hereunder or
preclude Employee from asserting such fact or circumstance in enforcing his
rights hereunder. The failure by the Company to include in the notice any fact
or circumstance that contributes to a showing of Cause shall not waive any right
of the Company hereunder or preclude the Company from asserting such fact or
circumstance in enforcing its rights hereunder.
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8. Miscellaneous Provisions.
(a) No Duty to Mitigate. Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner).
(b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by Employee and the Chief Executive Officer or, if Employee is the
Chief Executive Officer, an authorized officer or board member of the Company.
No waiver by either party of any breach of, or of compliance with, any condition
or provision of this Agreement by the other party shall be considered a waiver
of any other condition or provision or of the same condition or provision at
another time.
(c) Entire Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, without giving effect to its conflict of laws provisions.
(e) Severability. If any provision or set of provisions of this Agreement
(or any portion thereof) is held by an arbitrator or court of competent
jurisdiction to be invalid, illegal or unenforceable for any reason whatever:
(a) such provision shall be limited or modified in its application to the
minimum extent necessary to avoid the invalidity, illegality or unenforceability
of such provision and such modified provision shall be reduced to a writing and
signed by the parties hereto; (b) the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby; and (c) to the fullest extent possible, the provisions of this
Agreement shall be construed so as to give effect to the intent manifested by
the provision (or portion thereof) held invalid, illegal or unenforceable.
(f) Withholding Taxes. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
(g) Successors and Assigns. Employee may not assign any of his or her
rights hereunder other than in connection with estate planning or pursuant to
Employee's will or the laws of intestate succession. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
Company. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or the Company's successors and
assigns the rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
(h) Amendment of Option and Purchase Agreements. The Company and Employee
agree that the provisions of this Agreement shall supersede any conflicting
provisions of any stock purchase or stock option agreement of Employee, and the
Company and Employee agree to execute such further documents as may be necessary
to amend any such agreement.
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(i) Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any provisions of this Agreement.
(j) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
ALSIUS CORPORATION EMPLOYEE
By By
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Print Name Print Name
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Title
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